The cabinet of Narendra Modi has approved the hike of the foreign direct investment in the insurance sector to 49% from the current level of 26%, TV reports say. The Insurance Laws (Amendment) Bill will be presented in the current session of the Parliament. The hike was a part of Arun Jaitley's Budget, and therefore both cabinet and Parliament approvals were in the offing. BJP with its numbers in the Lok Sabha, will not find it difficult to get the Bill passed. Moreover Congress will also reportedly support the Bill.
The private sector companies in the insurance sector would now be open to higher inflow of funds from foreign investors.
Jaitley said in his Budget speech earlier this month that he would go for FDI selectively, and was introducing it to the insurance sector as it was facing severe shortage of funds. This would be controlled by Foreign Investment Promotion Board. The government also said it would take up the Insurance Amendment Bill as soon as possible in the Parliament.
Ironically the Bill had been pending in the PArliament since 2008, when the UPA government could not get it approved due to opposition from several parties including the BJP.
Welcoming Jaitley's decision on insurance sector Congress party has indicated that it will support the bill after the Budget. "We, unlike NDA, do not change stance when we are in government and (when we are in opposition). We will stand by (it) ... provided every clause in it (Bill) is for the benefit of the common man," party leader Jyotiraditya Scindia had said when asked whether the Congress will support the Bill in Parliament.
The insurance sector was opened up for private sector in 2000 after the enactment of the Insurance Regulatory and Development Authority Act, 1999 (IRDA Act, 1999), which had increased the FDi limit to 26%.